Asked by Cameryn Stewart on Jun 25, 2024
Verified
A metal works fabricator is about to release a new model of his firm's copper sculpture and fountain. The operations manager estimates that this product is subject to a 90% learning rate on labour only-the material bill is not affected by experience. The firm prices its work based on cost-the sum of materials plus 30% and labour plus 50%. (This allows the firm to practice a little "demand management" for its very popular works.) The first item has already been finished; the material bill was $800 and labour totalled 40 hours. The firm pays its metalworking artisans an average of $18 per hour. What should be the asking price of the first unit? The second?
Learning Rate
A concept in machine learning and various disciplines that dictates the speed at which a model or a learner adapts to a problem, often influencing training duration and efficiency.
Copper Sculpture
Artistic representations or functional objects made primarily from copper, showcasing the metal's unique qualities through various techniques.
- Set pricing based on learning curves and cost-plus pricing strategies.
Verified Answer
AH
Ahmed HeshamJun 26, 2024
Final Answer :
Based on the pricing formula, the first unit should be priced at $800 ∗ 1.30 + 40 ∗ $18 ∗ 1.50 = $1,040 + $1,080 = $2,120. The second unit will be cheaper because of the learning effect: $800 ∗ 1.30 + 36 ∗ $18 ∗ 1.50 = $1,040 + 972 = $2,012.
Learning Objectives
- Set pricing based on learning curves and cost-plus pricing strategies.